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Repeal it: Dodd-Frank Entrenches Crony Capitalism

The Dodd-Frank financial overhaul law—also known as the “Federal Reserve Empowerment Law"—recently marked its first anniversary. Last summer, we fought this unconstitutional power grab tooth and nail. The lead sponsors of the bill Rep. Frank (D-Mass.) and former Sen. Dodd (D-Conn.) claimed that the 2,300-page bill would end “too big to fail.” But as we noted last July, “the financial overhaul bill sets the stage for future financial meltdowns.” Dodd-Frank has stifled job growth while doing absolutely nothing to rein in key instigators of the current economic fiasco.

Dodd-Frank has granted the federal government unprecedented regulatory powers. Economic writer and real estate investor Jeff Harding says that “the new financial overhaul bill is the greatest government takeover of the financial sector of the economy since the National Recovery Act of 1933 when Franklin Roosevelt attempted to introduce central planning in America.” It will eventually create at least 17 new bureaucracies with powers to regulate small businesses and consumers including the so-called Consumer Financial Protection Bureau.

The Dodd-Frank law even grants a federal bureaucracy the authority to monitor every single consumer transaction including credit card purchases. Despite the fact that the Federal Reserve was to a large degree responsible for the present financial mess, Dodd-Frank illogically makes them a primary financial regulator. The new financial regulation law will not prevent another fiscal crisis but it may be responsible for one.

Instead of allowing free-market mechanisms to set the right incentives for banks to make prudent lending decisions —where those who may profit are also the ones who will pay the cost of their own failure—the law sends the wrong message. It institutionalizes moral hazard by giving banks an incentive to partake in risky and high-reward lending choices. The market will reward banks if they succeed but taxpayers are forced to foot the bill if they fail. It’s a win-win scenario for banks.

The government sponsored enterprise (GSEs) Fannie Mae and Freddie Mac also played a major role in the financial crisis. Fannie and Freddie are entities created by the federal government to make and guarantee mortgage loans. These mortgage giants are a classic example of crony capitalism, where big government and business get in bed together. Frostburg State University economics professor William Anderson states that “in a free market, there would be nothing like these entities, or if something like them existed, there would be no guarantee that losses would be covered by taxpayers.” Instead of ending taxpayer support from the house GSEs, the Dodd-Frank financial overhaul law will continue to allow them to function without consequences.

Austrian economists predicted the housing market crash long before 2008. During a House Financial Services Committee meeting on September 10, 2003, Rep. Ron Paul (R-Texas) asserted that Fannie and Freddie distortions in the housing market would lead to an inevitable housing bubble burst in the near future. He concluded his speech with these words, “Congress should act to remove taxpayer support from the housing GSEs before the bubble bursts and taxpayers are once again forced to bail out investors who were misled by foolish government interference in the market.” Wouldn’t we be better off if we listened to Ron Paul’s advice in the first place?

Do you know who didn’t see the financial crisis coming? (Or at least didn’t publicly acknowledge a problem?) Chris Dodd and Barney Frank. Time and time again Dodd and Frank denied that a housing burst was on the horizon. In a 2003 hearing, Barney Frank said that "I do not think we are facing any kind of a crisis. That is, in my view, the two government sponsored enterprises we are talking about here, Fannie Mae and Freddie Mac, are not in a crisis. . . . I do not think at this point there is a problem with a threat to the Treasury.” We shouldn’t trust the same politicians who got us into this mess to show us the way out.

Both Chris Dodd and Barney Frank have serious conflict of interests with Fannie Mae and Freddie Mac. As a Boston Globe headline reads, “Frank's fingerprints are all over the financial fiasco.” Throughout the 1990’s, Barney Frank had a romantic relationship with Herb Moses, an executive at Fannie Mae lobbying for relaxed lending restrictions. Moses worked at the GSE for seven years, while Frank was on the Housing Banking Committee, which had jurisdiction over Fannie Mae.

As you may have already predicted, Barney Frank spent years blocking efforts to impose tougher regulations on Fannie Mae and Freddie Mac. As Fox News reports, “In 1991, the year Moses was hired by Fannie, the Boston Globe reported that Frank pushed the agency to loosen regulations on mortgages for two- and three-family homes, even though they were defaulting at twice and five times the rate of single homes, respectively.” These loose lending programs help lead to the financial meltdown. Barney Frank claims that his close relationship with Moses was not a conflict of interest but common sense says otherwise.

Chris Dodd took generous bribes from politically connected banks. In 2008, Countrywide Financial, a major beneficiary of the Fannie and Freddie’s loan programs, and its Chief Executive, Angelo Mozilo were finally busted for loaning at lower than market rates to key politicians involved with regulation and oversight of Countrywide Financial through a group called the “Friends of Angelo.” Senate Committee on Banking, Housing and Urban Affairs member Chris Dodd received $780,000 in loans below the market rate of interest. Whose side do you think this guy is on? The taxpayers or the big banks?

The underlying belief behind the Dodd-Frank financial overhaul law is that the free market is to blame for the financial crisis. Barney Frank has foolishly said that “the private sector got us into this mess. The government has to get us out of it.” The free market has not failed since we’ve never had free market capitalism. Neither the Federal Reserve nor government sponsored enterprises would exist in a true free market society.

The current financial mess is not a result of too little government regulation, but too much. Henry Hazlitt once wrote that “worse than the slump itself may be the public delusion that the slump has been caused, not by the previous inflation, but by the inherent defects of ‘capitalism.’” Dodd-Frank is a misguided approach that will stifle economic growth while infringing on personal liberty. We must repeal the Dodd-Frank Act and end all taxpayer support of government sponsored enterprises.

It is OVER ! Boehner has sold out the American people. It is time we once again raise up in protest and MARCH !!! The Sept 12th anniversary of the first March ( of over 1 million patriots ) fast approaches !! We need to descend on Washington again with even bigger numbers !! Many , many patriots are just awaiting the call... We the People are angry and frustrated and need to let Boehner and all other rinos ( and the rest of congress and Obama ) know that we will not stand for this !! I felt we should have marched sooner, but now we definetly need to !! last year the Beck rally kept the numbers lower than they should have been, but now we are all together and can unify for the Sept 12th ( or that weekend ) date. Biden calls us terrorists, the MSM lies and says that the debt bill is a victory for us ( the Tea Party ) and the rest of the democrats and others try to tear us down.., and yet we sit......, we need to MARCH..!!!

Americans are feeling the pain at the gas pump. Gasoline prices have soared 42 cents a gallon since the beginning of the year. The nationwide average is now $3.74 a gallon, a 101 percent increase from January 2009. So who’s to blame?

[Click here to see a PDF version of this report.]1. The Federal Reserve Has Far Too Much Power to Control Our Economy Federal Reserve Chairman Ben Bernanke has the power to dramatically impact our economy at

I, however, place economy among the first and most important republican virtues, and public debt as the greatest of the dangers to be feared.—Thomas Jefferson Last week on January 26th Congress voted against a measure to deprive the president of the authority to raise the debt ceiling. In a 44 – 52 vote, the president was granted permission to add another $1.2 trillion to the national debt, deferring for some time any difficult albeit necessary fiscal decisions. For the first time in over half a century, the national debt is roughly equal to the gross domestic product of the United States. This situation is analogous to an individual whose debts are equal to the total value of his income and savings. Mainstream economists will note, however, that this is not as dire of a situation as it first appears to be. After World War II, the national debt was 122 percent of GDP, about 22 percent higher than that of today. This is true, although there are several other factors that are worth consideration in comparing and contrasting the fiscal solvency of the United States in 1946 with that of today.

The Federal Reserve fought tooth and nail for over two years to keep their actions hidden from the American people. The central bank lost part of their battle for secrecy when they were court ordered through a Freedom of Information Act request to release 29,000 pages of documents earlier this year.

I’ve been closely following the loosely organized Occupy Wall Street protests on social media sites over the past few weeks. Now, I’m all for citizen activism and freedom of assembly, but I’m still unconvinced that most of these protesters know what exactly they're protesting. They’re angry about the state of the economy and rightfully so. While I sympathize with their frustration towards our weak economy, their anger is largely misdirected. They would be better off to pick up and move their protests down a few blocks to the New York Federal Reserve building.

Speculation has risen that Fed chairman Ben Bernanke may announce yet around round of quantitative easing or QE3 on Friday. As economist Thomas Sowell says, “when people in Washington start creating fancy new phrases, instead of using plain English, you know they are doing something they don't want us to understand.” The term quantitative easing in layman’s terms just means that the Fed will print more money out of thin air. What could possibly go wrong? Well, for starters, the value of the U.S.

On this day 40 years ago, former President Richard Nixon suspended the convertibility of the U.S. dollar into gold. The decision, which radically changed the global monetary system, still holds enormous ramifications for every single American today. The money in our pockets would be worth more if Nixon hadn’t cut the link between U.S. dollars and gold.

July 21 marked the anniversary of the passing of the Dodd Frank Wall Street Reform and Consumer Protection act. Unfortunately the law has neither reformed Wall Street nor Protected Consumers. The 3,200 page law has spawned several new regulatory bodies, and has granted 11 separate federal agencies the authority and the legal obligation to create over 400 new financial regulations.

It has been just over a year since Congress and President Obama passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. The massive piece of legislation was intended promote financial stability and prevent another major Wall Street collapse. One year later, most of the rules and regulations required by the law have yet to go into effect.